April 2007 - Government rail subsidies more failures

01 June 2013

Transport Secretary Douglas Alexander announced last month that the government is to provide extra funding to private rail firms to finance an additional 1,000 train carriages in a bid to combat overcrowding. Of course we all welcome any positive action to tackle overcrowding – but why should the government finance private companies? And is this the best way the money could be spent?

The train companies took a contract to run a service, but overcrowding shows they’re not doing it in an acceptable way. Now the government has agreed to use public money to bail them out.

This is remarkable for three reasons.

Firstly, why should any private company be subsidised for failing to meet standards it agreed to meet in its franchise contracts? If a garage agrees to fix your car and they don’t do it properly, you don’t buy them a new ramp. You go to another garage.

Secondly, if the government can subsidise firms why can’t it provide money to pay for union demands – like pensions? When we spoke to ministers about rail pensions they said they’d like to help, and they were very sorry - but they couldn’t interfere with private companies – and certainly couldn’t offer subsidies!

And thirdly, if the government is happy to subsidise private firms to run the rail network why doesn’t it take it back into public hands and do the job properly?

I would also question whether the subsidy is being used in the right way. Longer trains is a short term solution. Last year rail passenger traffic grew by 10% and demand is expected to continue rising rapidly. An extra carriage here and there is playing with the problem. The solution is to run more trains. This means there is an overwhelming case for more investment in in-cab signalling which would ensure that there is stopping distance between any two trains on a track – thus allowing more, safer, rail traffic. This is a much better long-term strategy which would allow for growth : more carriages is simply plastering over the problem rather than looking at a solution.

Outside signalling is the last remnant of the Victorian railway. The alternative – using modern radio technology to transmit information from train to train – is safer, modern and available.

If the government wants to subsidise rail – this would be the best way for them to do it.